- THE IMF & THE US ECONOMY -
The Australian of 9th January 2004 carried the banner "US Threat to world economy" and quoted a brief by the IMF (International Monetary Fund) stating the threat arose from massive trade and budget deficits.
Lets go over that slowly. The 1929 recession was caused when the US restrained it's spending to balance the budget. Is it the intent of the IMF that the USA to do that again?
Incidentally, the US trade deficit is estimated as around 400 billion, out of a (approx?) 1.2 trillion dollar economy? that is about 3.3%. So why is nobody concerned about Australia, which was running a 3.5% deficit according to the Sydney Morning Herald of 10 January 2004?
Lets make like detectives and look for motives. Why would the IMF want that? Well I could speculate that China and Europe and much of the rest of the world are extremely pissed off by the falling US dollar. Their products are becoming uncompetitive.The $US was historically high because those countries kept buying dollars, for reasons ranging through (a) US firms are stable, profitable and (b) it kept their currencies exchange rate down. Now those nations cannot sell their goods to the USA, (and probably not even euro steel if the dollar keeps falling).
If the value of the US$ continues to decline, eventually it could get so low that the US would no longer need to protect it's markets from cheap agricultural products such as Australian beef and sugar.
The US government appears unworried by it's declining currency. International trade is only a small part of the US economy. In fact the deficit is comparable to the Australian deficit in percentage terms, but nobody is getting their knickers in a knot about our deficit.
A darker explanation might lie in the politico-cultural revolution that is emanating from the US. People over the world see that the government in the US is responsive to the will of the people. They see that low taxes make the nation wealthier. They see immigrants like Arnold Schwartzennegger becoming head of the most powerful state in the USA. World leaders, to counter their people's expectations, (and hang on to their ill gotten gains) are attempting to paint the USA as a spendthrift villain.
But still, the cleverest people in the world are migrating in floods to the USA, seeking freedom from opressive government.
Your diarist predicts that the US will continue to increase it's share
of the world economy, until eventually the overtaxed people of the rest
of the world remove their ruling classes (of which establishment journalists
are an integral part) in a new wave similar to that which followed the
French and American revolutions.
- KYOTO -
In todays papers the news is that the royal scientist (or is that the beaurocratic scientist) has got a royal bee in his royal bonnet about global warming. He claims that most of his (royal) experts support his view. He claims to also be worried that 75% of animal and plant species might become extinct as a result of global warming. Since wild animals seem to be the pool from which Ebola and SARS have derived, your diarist thinks that maybe that is a good idea, so lets hope he is right about global warming making animal species extinct.:)
It is all very well for the eurocrats of the UK with it's stagnant economy,
(which will probably begin contracting when the North Sea oil dries up),
to bewail the energy profligacy of their more successful and hard
working cousins in the US, but American citizens also buy much of their
oil (virtually untaxed) on the international market. It is not through
virtue that the UK economy does not prosper similarly. It is because of
overgoverning and overtaxation by the UK bureaucracy.